Techdirt. Stories filed under "laundering"Easily digestible tech news...https://www.techdirt.com/
en-usTechdirt. Stories filed under "laundering"https://ii.techdirt.com/s/t/i/td-88x31.gifhttps://www.techdirt.com/Tue, 19 Aug 2014 21:09:59 PDTUnsealed Motions Shows How Team Prenda Sought To Hide MoneyMike Masnickhttps://www.techdirt.com/articles/20140818/18023528247/unsealed-motion-shows-how-team-prenda-sought-to-hide-money.shtml
https://www.techdirt.com/articles/20140818/18023528247/unsealed-motion-shows-how-team-prenda-sought-to-hide-money.shtmlangrily hitting back against a sealed motion for contempt against him, arguing that he was lying and hiding assets in his attempt to plead poverty, after a court ordered Team Prenda to file detailed financial statements. They did not do so. Instead, as the court noted:

In the case where there has been no attempt to comply with the Court's order, plaintiff's counsel must show a "complete inability to pay." ... Plaintiff's counsel, "stated differently, . . . [has] the burden of establishing clearly, plainly, and unmistakably that compliance is impossible." ....

The Court finds that plaintiff's counsel has not met its burden. They submitted incomplete, and to say the least suspicious, statements of financial condition. Attached to each statement was a letter from their certified public accountant ("CPA"). In these letters, the CPA indicates a departure from generally accepted accounting principles. He further notes that plaintiff's counsel elected to omit substantially all of the disclosures required by generally accepted accounting principles. The Court finds these statements insufficient to establish plaintiff's counsel's inability to pay.

Following that, lawyers Dan Booth and Jason Sweet filed the motion that got Steele so angry -- highlighting significant evidence that Steele and others had hid money offshore. Steele hit back at that, with little effect, and, as Fight Copyright Trolls now alerts us, the original filing that reveals some of Steele's financial shenanigans has been unsealed. Not surprisingly, it paints a picture of a lot of "shell games" for how the money was moved around. Here's just some of the details:

1. On December 13, 2011, Steele opened a CitiCard account. In the application for the account he identified his income amount as $900,000.00 and his total income for 2011 as $930,000. See Exhibit A hereto.

2. A statement from Fifth Third Bank shows that Steele had $2,177.005.27 in personal savings accounts there on September 5, 2012. See Exhibit B hereto. By September 25, 2012, two deposits totaling that amount had been transferred from Steele’s personal account into
Prenda’s IOLTA account. The remainder of that money was then wired to an unknown destination the next day. See Exhibit C hereto.

3. On December 18, 2012, Prenda Law, Inc. (“Prenda”) paid out $5,000.00 to McCullough Sparks, an asset protection law firm located in Provo, Utah. See Exhibit D hereto. McCullough Sparks promotes its key service as the “541 Trust,” which “removes assets from your personal ownership and from any disclosure of your personal assets. It is a private document and it cannot be discovered through any public records.” See Exhibit E hereto. A CPA would not know about such a trust unless Plaintiffs’ Counsel disclosed it to them.

4. Plaintiff’s Counsel brought this case, like hundreds of others, as part of their coercive litigation settlement practice. See Dkt. No. 61 pp. 14-19. Between 2010 and 2013, when that practice was at its height, BluePay, one of several online credit card processors they used to process settlements from Doe defendants, processed more than $4.4 million in settlement monies, paid out to Prenda, Steele Hansmeier PLLC, Media Copyright Group, LLC, and LiveWire Holdings, LLC. See Exhibit F hereto; see also Dkt. No. 124 p. 4 n.3 (detailing relationships between Plaintiff’s Counsel and these and other non-parties).

5. Smith’s subpoenas sought information about eighteen closely related non-parties. See Dkt. No. 116-1; Dkt. No. 124 p. 4 n. 3. The non-parties opened at least forty-seven bank accounts in just two of the banks subpoenaed since 2010, and have closed all but a few of those accounts. Several of these accounts were opened and shut so quickly as to suggest that Plaintiff’s Counsel have transferred monies between accounts and related entities in a deliberate attempt to obscure its sources and their current holdings. For example, on August 13, 2012, Steele withdrew $29,924.56 from Media Copyright Group, LLC. See Exhibit G. He then opened two Fifth Third Bank accounts in his personal name the same day, depositing $27,924.56 into the account identified in Exhibit H and $2,000 into the account identified in Exhibit I. He then closed the account in Exhibit H on September 25, 2012, transferring all its funds into the other account in Exhibit I, which he closed on January 7, 2013 (after transferring $1,000 to Prenda Law, Inc. on October 2, 2012.).

6. Likewise, on December 15, 2011, John Steele transferred $159,000 from his personal account
to that of Steele Law. See Exhibit J. That same day, Steele Law transferred $160,000 into the
account of Miami Beach Consulting (“MBC”). Id. MBC is a business owned by John Steele’s
wife, Kerry Steele (neé Eckenrode). See Exhibit K. Four days later, $150,000 of that money
was wired to an unknown destination via Sabadell Untd. Bank, a subsidiary of Banco de
Sabadell, S.A. and provider of international banking services.6 Miami Beach Consulting’s
account was closed two months later. See Exhibit L.

7. Duffy and Steele are the two signatories Prenda’s IOLTA and operating accounts with Fifth Third Bank. See Exhibit M hereto. This tends to refute Steele’s repeated denials that he has an ownership interest in Prenda.7 Similarly, and despite his denials otherwise, Paul Hansmeier was a partner in Media Copyright Group (a/k/a/ 6881 Forensics), the IT firm which Plaintiff’s Counsel used to identify alleged infringements. A check made out to Media Copyright Group from Alpha Law and signed by Hansmeier clearly states “capital contribution” “for 50% interest” See Exhibit N hereto.

In the footnotes, it also highlights that the use of "Steele Law" for transferring money is especially suspect, given that Steele claimed that Steele Law was gone as an entity ten months earlier. The filing also discusses money transfers to Latvia, combined with evidence that Steele had been reading about hiding money in Latvia with a program designed to get you a Latvian passport and citizenship.

It's still somewhat circumstantial evidence, but as FCT notes, it's somewhat surprising that Steele apparently missed the deadline to try to keep this particular document sealed...

On top of that, in a second filing, even more questionable moves are revealed. Again, just a snippet:

A. Sabadell Bank.
Smith has identified transactions between accounts owned by Steele and Sierra Investment
Partners (“Sierra”) totaling $212,125.00. See, Ex. Q. Sierra is a business Steele co-owns with Robert
Balzebre that maintains an account at Sabadell Bank. See, Ex. R. Mr. Balzebre has been involved
with Steele in several business ventures going back to 1997—including Steele Hansmeier. See Ex. S.
Continued discovery would clarify the true extent of Steele’s financial holdings.

B. ING.
Hansmeier transferred at least $62,979.00 into an account at ING (now owned by Capital One).
See Ex. T. Similarly, Hansmeier has transferred $515,000 to Monyet LLC with the notation that such
checks were for “estate planning.” See Ex. U. Smith can only surmise that Monyet’s account(s) may
also be found at ING. Said company has no discernible address, officers, employees, products or
services—but a transfer from Livewire indicates who the owner is: “Monyet/Paul Robert
Hansmeier.” Id.

C. Pershing, LLC.
Steele’s frenzied attempt to prevent GMS Group, from complying with discovery though
Smith has not yet subpoenaed them, is now understood. Dkt. No. 158. Documents produced by
Pershing include statements from GMS Group. Pershing is a clearing firm for GMS Group, and while
it has in its possession some documents from GMS Group, it by no means has them all. What Smith
was able to obtain indicates Steele transferred via GMS Group in excess of $200,000.00 to various
accounts, and under at least two other of his business aliases/shell companies to banks with branches
in the US, UK and Canada. See Ex. V.

Remember how, among other things, Judge Wright had referred Team Prenda to the IRS? I wonder if they'll be interested in some of these transactions....

Permalink | Comments | Email This Story
]]>can't-have-anyone-find-this-cash,-could-we?https://www.techdirt.com/comment_rss.php?sid=20140818/18023528247Thu, 22 Aug 2013 20:00:08 PDTWas DEA's Fake Claims Of Not Being Able To Intercept iMessages Part Of Evidence Laundering Efforts?Mike Masnickhttps://www.techdirt.com/articles/20130815/12060524189/was-deas-fake-claims-not-being-able-to-intercept-imessages-part-evidence-laundering-efforts.shtml
https://www.techdirt.com/articles/20130815/12060524189/was-deas-fake-claims-not-being-able-to-intercept-imessages-part-evidence-laundering-efforts.shtml
However, I was recently reminded of a story from just a few months before all of these revelations started coming out -- in which a DEA memo was "leaked," in which the DEA complains that Apple's iMessage encryption had "stymied" DEA agents from being able to spy on conversations. Except, as many people noted, this was clearly not true, because the iMessage encryption is not truly end-to-end. Apple holds the key itself, so the DEA can easily get the decrypted messages via Apple. Most of the assumptions were that this bogus memo was leaked either to try to get even more legal justification for requiring back doors in all communications technology, or to try to lull drug runners into believing iMessage was safe when it's clearly not.

Of course, now I'm wondering if there's even more to it: given that it's now been confirmed that DEA staff have been told to fake things to cover up where investigations originated, perhaps the letter was part of a laundering effort to hide the fact that some key breaks came from decrypted iMessage conversations that the government had been snooping through...